Tales from this insane real estate market [Home sales]

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simplesimon
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Re: Tales from this insane real estate market

Post by simplesimon »

I just read an article in the WSJ this morning about companies like Better.com, an online mortgage originator (the CEO more recently known for laying off 900 employees on Zoom), providing a service where they will make an all-cash offer on behalf of the buyer, then provide financing to the buyer. If the buyer chooses not to get a mortgage from Better, then they will charge a 2.5% fee.

Better doesn't service my area, but I thought the business concept was very interesting. Leveling the playing field for regular buyers? Feeding the real estate frenzy? Both?
stoptothink
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Re: Tales from this insane real estate market

Post by stoptothink »

simplesimon wrote: Thu Jun 09, 2022 11:46 am I just read an article in the WSJ this morning about companies like Better.com, an online mortgage originator (the CEO more recently known for laying off 900 employees on Zoom), providing a service where they will make an all-cash offer on behalf of the buyer, then provide financing to the buyer. If the buyer chooses not to get a mortgage from Better, then they will charge a 2.5% fee.

Better doesn't service my area, but I thought the business concept was very interesting. Leveling the playing field for regular buyers? Feeding the real estate frenzy? Both?
I know a handful of people who have used similar services in the last few years.
runninginvestor
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Re: Tales from this insane real estate market

Post by runninginvestor »

simplesimon wrote: Thu Jun 09, 2022 11:46 am I just read an article in the WSJ this morning about companies like Better.com, an online mortgage originator (the CEO more recently known for laying off 900 employees on Zoom), providing a service where they will make an all-cash offer on behalf of the buyer, then provide financing to the buyer. If the buyer chooses not to get a mortgage from Better, then they will charge a 2.5% fee.

Better doesn't service my area, but I thought the business concept was very interesting. Leveling the playing field for regular buyers? Feeding the real estate frenzy? Both?
They've been doing it for a year or so. Other companies do similar. Feeds the fenzy imo. You can tell as they're mostly in markets that had red-hot prices.

https://better.com/content/better-cash-offer-faq/
https://better.com/with/cash-offer-terms

"The Better Cash Offer Program is currently available in Alabama, Arizona, California, Colorado, Florida, Georgia, Maryland, Michigan, North Carolina, New Jersey, Pennsylvania, Oregon, Tennessee, Texas, Virginia, Washington DC and Washington State."
newyorker
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Re: Tales from this insane real estate market

Post by newyorker »

My neck of the woods. Good houses get sold quick. Bad houses linger on the market.
finite_difference
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Re: Tales from this insane real estate market

Post by finite_difference »

runninginvestor wrote: Thu Jun 09, 2022 11:52 am
simplesimon wrote: Thu Jun 09, 2022 11:46 am I just read an article in the WSJ this morning about companies like Better.com, an online mortgage originator (the CEO more recently known for laying off 900 employees on Zoom), providing a service where they will make an all-cash offer on behalf of the buyer, then provide financing to the buyer. If the buyer chooses not to get a mortgage from Better, then they will charge a 2.5% fee.

Better doesn't service my area, but I thought the business concept was very interesting. Leveling the playing field for regular buyers? Feeding the real estate frenzy? Both?
They've been doing it for a year or so. Other companies do similar. Feeds the fenzy imo. You can tell as they're mostly in markets that had red-hot prices.

https://better.com/content/better-cash-offer-faq/
https://better.com/with/cash-offer-terms

"The Better Cash Offer Program is currently available in Alabama, Arizona, California, Colorado, Florida, Georgia, Maryland, Michigan, North Carolina, New Jersey, Pennsylvania, Oregon, Tennessee, Texas, Virginia, Washington DC and Washington State."
So better.com is acting like a real estate agent and (optional) mortgage lender?
The most precious gift we can offer anyone is our attention. - Thich Nhat Hanh
Californiastate
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Re: Tales from this insane real estate market

Post by Californiastate »

I’m calling a top.
todaysBob
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Re: Tales from this insane real estate market

Post by todaysBob »

corpgator wrote: Wed Jun 08, 2022 2:29 am Big uptick in inventory here in Bellevue, WA. We definitely found the top - at least for now. There's always a summer lull here, but this is definitely different. All houses in the neighborhood have accepted an offer within the week until the house directly across from me didn't get one and has now been on the market for 2 weeks - unheard of here. Currently 103 houses up for sale with over a week on the market. Only 15 houses have gone pending in the last 2 weeks while being on the market less than 2 weeks - that's a huge shift for a previously red hot market.
Seeing the same in Sammamish, WA. There are even houses which haven't gone pending for 2+ months! I haven't seen anything stay on market for more than a week before March. March definitely seems to be the top for Seattle area.
PowderDay9
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Re: Tales from this insane real estate market

Post by PowderDay9 »

Californiastate wrote: Thu Jun 09, 2022 10:40 pm I’m calling a top.
Same. I think the top already happened here in Florida. I'm seeing lots of small price drops on active listings already.
protagonist
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Re: Tales from this insane real estate market

Post by protagonist »

PowderDay9 wrote: Thu Jun 09, 2022 10:54 pm
Californiastate wrote: Thu Jun 09, 2022 10:40 pm I’m calling a top.
Same. I think the top already happened here in Florida. I'm seeing lots of small price drops on active listings already.
We bought in a very hot market in Florida a year ago. All cash, no inspection, no contingencies, escalation clause, $22K above asking price (which was already high). Now similar apartments are selling for about 20% more than what we paid. We expect it to crash at some point, but since we don't plan on selling that is not so important to us.

A friend tried hiring a realtor in the same market....they want to buy a house but need to take a mortgage. The realtor refused to take them as clients, stating that if they needed a mortgage their chances of being selected as a buyer were so small that the realtor did not think it was worth his time.
finite_difference
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Re: Tales from this insane real estate market

Post by finite_difference »

Californiastate wrote: Thu Jun 09, 2022 10:40 pm I’m calling a top.
Everywhere?
The most precious gift we can offer anyone is our attention. - Thich Nhat Hanh
moneyflowin
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Re: Tales from this insane real estate market

Post by moneyflowin »

ryman554 wrote: Sun May 29, 2022 7:59 am Things have gone off a cliff here in the south bay (san jose).

We got our house successfully sold and a price higher than I would have ever imagined. However, viewers were down, and the number of offers was not so many. But it does only take one to set the price.

Many houses that listed the week after (or some even on the same week) are still languishing and some are starting to lower their price. My guess is high interest rates combined with a crash in the tech market is limiting buyers due to a) a lack of stock money and b) higher mortgage costs.

I feel incredibly lucky.
The South Bay has cooled off but is still slightly warm. But the East Bay has really cooled off. There are many price reductions, lots of new inventory, and houses sit for many weeks. It appears March/April was the peak. Hopefully no one bought with 5% down at that time because they could be underwater soon

I think the WFH trend is reversing, and these distant areas like the East Bay will be hit first as demand cools. People want to live near the office again. Once the UE rate rises, the economy slows, and employers have the upper hand, they'll demand workers come back to the office 5 days a week. Right now, employees still have leverage which is why companies keep extending WFH.... but they won't forever.
runninginvestor
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Re: Tales from this insane real estate market

Post by runninginvestor »

finite_difference wrote: Thu Jun 09, 2022 9:54 pm
runninginvestor wrote: Thu Jun 09, 2022 11:52 am
simplesimon wrote: Thu Jun 09, 2022 11:46 am I just read an article in the WSJ this morning about companies like Better.com, an online mortgage originator (the CEO more recently known for laying off 900 employees on Zoom), providing a service where they will make an all-cash offer on behalf of the buyer, then provide financing to the buyer. If the buyer chooses not to get a mortgage from Better, then they will charge a 2.5% fee.

Better doesn't service my area, but I thought the business concept was very interesting. Leveling the playing field for regular buyers? Feeding the real estate frenzy? Both?
They've been doing it for a year or so. Other companies do similar. Feeds the fenzy imo. You can tell as they're mostly in markets that had red-hot prices.

https://better.com/content/better-cash-offer-faq/
https://better.com/with/cash-offer-terms

"The Better Cash Offer Program is currently available in Alabama, Arizona, California, Colorado, Florida, Georgia, Maryland, Michigan, North Carolina, New Jersey, Pennsylvania, Oregon, Tennessee, Texas, Virginia, Washington DC and Washington State."
So better.com is acting like a real estate agent and (optional) mortgage lender?
I thought they normally act as an agent & lender if you want.
THY4373
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Re: Tales from this insane real estate market

Post by THY4373 »

finite_difference wrote: Fri Jun 10, 2022 12:06 am
Californiastate wrote: Thu Jun 09, 2022 10:40 pm I’m calling a top.
Everywhere?
I doubt top will be hit everywhere at the same time as there is too much local variation. A lot of the cooling reports here are from what would appear to be hotter markets. My MCOL area after what appeared to be a pause about a month ago is roaring on (desirable properties with ever higher asking prices are selling in days and this isn't at the low end of the market either). I suspect there is a FOMO wave hitting in my neck of the woods but time will tell.
Californiastate
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Re: Tales from this insane real estate market

Post by Californiastate »

finite_difference wrote: Fri Jun 10, 2022 12:06 am
Californiastate wrote: Thu Jun 09, 2022 10:40 pm I’m calling a top.
Everywhere?
The froth will roll over first. Great locations will be the last.
vfinx
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Re: Tales from this insane real estate market

Post by vfinx »

moneyflowin wrote: Fri Jun 10, 2022 3:58 am
ryman554 wrote: Sun May 29, 2022 7:59 am Things have gone off a cliff here in the south bay (san jose).

We got our house successfully sold and a price higher than I would have ever imagined. However, viewers were down, and the number of offers was not so many. But it does only take one to set the price.

Many houses that listed the week after (or some even on the same week) are still languishing and some are starting to lower their price. My guess is high interest rates combined with a crash in the tech market is limiting buyers due to a) a lack of stock money and b) higher mortgage costs.

I feel incredibly lucky.
The South Bay has cooled off but is still slightly warm. But the East Bay has really cooled off. There are many price reductions, lots of new inventory, and houses sit for many weeks. It appears March/April was the peak. Hopefully no one bought with 5% down at that time because they could be underwater soon

I think the WFH trend is reversing, and these distant areas like the East Bay will be hit first as demand cools. People want to live near the office again. Once the UE rate rises, the economy slows, and employers have the upper hand, they'll demand workers come back to the office 5 days a week. Right now, employees still have leverage which is why companies keep extending WFH.... but they won't forever.
Seeing this as well in the Tri-Valley. It’s by no means a buyer’s market yet, but the mania is gone. I’m not so sure if return to office is the cause though, and am even less certain now about the trajectory of office vs remote. If anything, it seems like we are tilting back towards remote again in tech.

This particular area is tricky to predict, because for some, it is an area that they will have to move out of if they deem the commute is too bad, but for others, it will be an area that is desirable, particularly if they only need to be in office a few times per quarter (which is a growing trend, as companies struggle to implement a “hybrid” X times per week system). There was no shortage of people even before the pandemic who lived out here and worked in the Peninsula or SF.

I actually don’t think office vs remote will be a dominant theme impacting house prices here. Rather it will be more about the strength of the economy in general.
sandan
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Re: Tales from this insane real estate market

Post by sandan »

THY4373 wrote: Fri Jun 10, 2022 8:15 am
finite_difference wrote: Fri Jun 10, 2022 12:06 am
Californiastate wrote: Thu Jun 09, 2022 10:40 pm I’m calling a top.
Everywhere?
I doubt top will be hit everywhere at the same time as there is too much local variation. A lot of the cooling reports here are from what would appear to be hotter markets. My MCOL area after what appeared to be a pause about a month ago is roaring on (desirable properties with ever higher asking prices are selling in days and this isn't at the low end of the market either). I suspect there is a FOMO wave hitting in my neck of the woods but time will tell.
For me, newish starter spec homes went up the most because builders raised their prices a lot. The per SQ foot cost for a 2 story box is insane.

Older, nicer, single story, bigger lot, better school, single owner ever homes are hitting the market hard and are at good values for people that can afford. Feels like retirees are finally downsizing.

Im willing to bet memorial day was the top (for small new suburb spec homes) for a few years to come.
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ray.james
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Re: Tales from this insane real estate market

Post by ray.james »

I thought this belongs here. I know investors are buying but the percentage and everything surprised me

"Investors bought up more than half of all Fort Worth homes sold last year
They pay cash and buy ‘as is’ — a home seller’s dream"

https://therealdeal.com/texas/2022/06/0 ... last-year/
When in doubt, http://www.bogleheads.org/forum/viewtopic.php?f=1&t=79939
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deanbrew
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Re: Tales from this insane real estate market

Post by deanbrew »

ray.james wrote: Fri Jun 10, 2022 5:24 pm I thought this belongs here. I know investors are buying but the percentage and everything surprised me

"Investors bought up more than half of all Fort Worth homes sold last year
They pay cash and buy ‘as is’ — a home seller’s dream"

https://therealdeal.com/texas/2022/06/0 ... last-year/
Wow, that is surprising. Like you, I know investors are a growing buyer segment, but I figured they were still a small percentage.
"The course of history shows that as the government grows, liberty decreases." Thomas Jefferson
59Gibson
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Re: Tales from this insane real estate market

Post by 59Gibson »

Sure has the feel of an irrational top. If I were looking to purchase, I'd have to wait a year or 2 and let things play out or settle down. Maybe prices would be even higher, but this is not a healthy environment right now. People twisting and bending themselves into pretzels to buy.
stoptothink
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Re: Tales from this insane real estate market

Post by stoptothink »

59Gibson wrote: Sat Jun 11, 2022 6:58 am Sure has the feel of an irrational top. If I were looking to purchase, I'd have to wait a year or 2 and let things play out or settle down. Maybe prices would be even higher, but this is not a healthy environment right now. People twisting and bending themselves into pretzels to buy.
We had an uncomfortable conversation with my in-laws this week about this. MIL received an unexpected early inheritance a few weeks ago when her parents sold their home and split the proceeds between her and her brother. They went from preparing their condo to put on the market and move in with us (again, out of financial necessity but likely permanently this time) to meeting with a real estate agent about buying a SFH home. We tried to talk them into staying put (they could pay off their condo and have enough left to put a major dent in FILs education debt), renting a SFH home for a while and reevaluating in a year or two, or continuing with the plan of selling and moving in with us (and using everything to pay off their debts and finally become financially solvent) - all on deaf ears. Fortunately it appears they will not be able to qualify for enough to buy anything right now, even using every penny of the inheritance and all expected proceeds from selling their condo (~50% down on homes they are looking at). Knowing them, they will find a way. We had to make it very clear, AGAIN, that they have a room in our home but we are not bailing them out financially under any circumstances.

I don't know if it is the "American dream" or what, but some people have a totally irrational emotional connection to owning a single family home. It's like "owning" that home will make my in-laws feel like they have made it, regardless of the fact that the are a complete disaster otherwise.
Last edited by stoptothink on Sat Jun 11, 2022 7:29 am, edited 1 time in total.
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AnnetteLouisan
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Re: Tales from this insane real estate market

Post by AnnetteLouisan »

Relative is a NYC landlord in a pickle. Rents went way up in the highly desirable and trendy area, a tenant’s lease is expiring who has only been a tenant for one year and is not indigent or middle income. Not a regulated/stabilized/controlled apartment. Market is now $2k above what tenant is paying.

It’s kind of a hard conversation to have and landlord is a nice guy, was never in this situation before because he always charged market so always renewed at the same rent. It’s just with inflation, eviction moratoria, etc., the market is now what it is. All the other apts in his bldg get $2k more. And some in the area get $3-4k more. How to handle so as not to unduly piss off tenant? Landlords costs did not go up that much.
Last edited by AnnetteLouisan on Sat Jun 11, 2022 8:49 am, edited 1 time in total.
THY4373
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Re: Tales from this insane real estate market

Post by THY4373 »

AnnetteLouisan wrote: Sat Jun 11, 2022 7:28 am Relative is a NYC landlord in a pickle. Rents went way up in the highly desirable and trendy area, a tenants lease is expiring who has only been a tenant for one year and is not indigent or middle income. Not a regulated/stabilized/controlled apartment. Market is now $2k above what tenant is paying.

It’s kind of a hard conversation to have and landlord is a nice guy, was never in this situation before because he always charged market so always renewed at the same rent. It’s just a inflation etc the market is now what it is. All the other apts in his bldg get $2k more. And some in the area get 3-4k more. How to handle so as not to unduly piss off tenant? Landlords costs did not go up that much.
There was a recent thread on this very topic here: viewtopic.php?t=377428 . As a renter who just went through a lease renewal I will say I was well aware of the rent increases and expected an increase (not an NYC increase but a decent size increase nonetheless in my MCOL) based on local market conditions. My landlords surprised me with a pretty nominal increase. But the bottom line to me as a renter is I was aware rents were up and was willing to pay it to a point (at a certain point of increase I would have downsized to an apartment for a shorter lease since I am beginning to consider buying a place as I approach retirement). If they are a good tenants the LL may wish to come in somewhat under market and understand they may lose the tenant anyway but hey this is business right?
Last edited by THY4373 on Sat Jun 11, 2022 9:22 am, edited 1 time in total.
THY4373
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Re: Tales from this insane real estate market

Post by THY4373 »

59Gibson wrote: Sat Jun 11, 2022 6:58 am Sure has the feel of an irrational top. If I were looking to purchase, I'd have to wait a year or 2 and let things play out or settle down. Maybe prices would be even higher, but this is not a healthy environment right now. People twisting and bending themselves into pretzels to buy.
This is my take I realize I cannot call the market but I am very close to the point of being a buyer after renting for six years. I still place some value on the flexibility of renting but my near term retirement plans are solidifying and if now was a good time to buy I'd probably take the risk and just buy but at this point it just seems unhealthy. It also doesn't help that the places I am looking at (townhomes or small SFHs designed for retirees but not strictly 55+) literally went no place over the last two decades in nominal dollars never mind real in my local area until the last 18 months when they are up 20-35%. I can afford them but I want to see how things shake out even at the risk of paying more or buying less.
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Re: Tales from this insane real estate market

Post by rage_phish »

AnnetteLouisan wrote: Sat Jun 11, 2022 7:28 am Relative is a NYC landlord in a pickle. Rents went way up in the highly desirable and trendy area, a tenant’s lease is expiring who has only been a tenant for one year and is not indigent or middle income. Not a regulated/stabilized/controlled apartment. Market is now $2k above what tenant is paying.

It’s kind of a hard conversation to have and landlord is a nice guy, was never in this situation before because he always charged market so always renewed at the same rent. It’s just with inflation, eviction moratoria, etc., the market is now what it is. All the other apts in his bldg get $2k more. And some in the area get $3-4k more. How to handle so as not to unduly piss off tenant? Landlords costs did not go up that much.
If landlords costs barely went up then what’s the dilemma? Be greedy or don’t be greedy?
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AnnetteLouisan
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Re: Tales from this insane real estate market

Post by AnnetteLouisan »

rage_phish wrote: Sat Jun 11, 2022 8:55 am
AnnetteLouisan wrote: Sat Jun 11, 2022 7:28 am Relative is a NYC landlord in a pickle. Rents went way up in the highly desirable and trendy area, a tenant’s lease is expiring who has only been a tenant for one year and is not indigent or middle income. Not a regulated/stabilized/controlled apartment. Market is now $2k above what tenant is paying.

It’s kind of a hard conversation to have and landlord is a nice guy, was never in this situation before because he always charged market so always renewed at the same rent. It’s just with inflation, eviction moratoria, etc., the market is now what it is. All the other apts in his bldg get $2k more. And some in the area get $3-4k more. How to handle so as not to unduly piss off tenant? Landlords costs did not go up that much.
If landlords costs barely went up then what’s the dilemma? Be greedy or don’t be greedy?
No, it’s how to break the rent increase to the tenant without triggering WW3. He’s definitely raising the rent $1700-2000, but will negotiate around $300 since it’s a good tenant. It’s not personal, it’s just the market. I want him to be as kind as possible about it - in person, not email, showing him comps, telling him it’s so awkward etc and apologizing for the inconvenience but that all the others are paying much more (they are), telling him it’s not personal, offering a good reference if he decides not to renew. Tenant hadn’t been there long so it’s not like they are settled in or anything. Also, tenant chose an unregulated apt in a high end area.

We had a distant relative commercial landlord get murdered over a rent increase in a recession in the 70s. So we know it’s a very emotional and politically charged thing.
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Re: Tales from this insane real estate market

Post by TomatoTomahto »

AnnetteLouisan wrote: Sat Jun 11, 2022 9:11 am
rage_phish wrote: Sat Jun 11, 2022 8:55 am
AnnetteLouisan wrote: Sat Jun 11, 2022 7:28 am Relative is a NYC landlord in a pickle. Rents went way up in the highly desirable and trendy area, a tenant’s lease is expiring who has only been a tenant for one year and is not indigent or middle income. Not a regulated/stabilized/controlled apartment. Market is now $2k above what tenant is paying.

It’s kind of a hard conversation to have and landlord is a nice guy, was never in this situation before because he always charged market so always renewed at the same rent. It’s just with inflation, eviction moratoria, etc., the market is now what it is. All the other apts in his bldg get $2k more. And some in the area get $3-4k more. How to handle so as not to unduly piss off tenant? Landlords costs did not go up that much.
If landlords costs barely went up then what’s the dilemma? Be greedy or don’t be greedy?
No, it’s how to break the rent increase to the tenant without triggering WW3. He’s definitely raising the rent $1700-2000, but will negotiate around $300 since it’s a good tenant. It’s not personal, it’s just the market. I want him to be as kind as possible about it - in person, not email, showing him comps, telling him it’s so awkward etc and apologizing for the inconvenience but that all the others are paying much more (they are), telling him it’s not personal, offering a good reference if he decides not to renew. Tenant hadn’t been there long so it’s not like they are settled in or anything. Also, tenant chose an unregulated apt in a high end area.

We had a distant relative commercial landlord get murdered over a rent increase in a recession in the 70s. So we know it’s a very emotional and politically charged thing.
As a middle ground between e-mail and in-person, how about a phone call?
I get the FI part but not the RE part of FIRE.
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deanbrew
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Re: Tales from this insane real estate market

Post by deanbrew »

rage_phish wrote: Sat Jun 11, 2022 8:55 am
If landlords costs barely went up then what’s the dilemma? Be greedy or don’t be greedy?
So, it's greedy to want to increase revenue from an investment?

Real estate rentals don't increase in a steady, linear fashion. There can be years where it's impossible to raise rent, at the same time taxes, insurance and other expenses continue to climb. It's not greedy for a landlord to take advantage of an improved rental market.

At the same time, a good tenant - who pays on time, keeps a property clean, doesn't call all the time with trivial concerns - is worth keeping. Having a conversation regarding increased market rents, while giving a good tenant a break, is a win-win for both parties.

Having said that, there are a lot of tenants who seem to think their rent should not go up if they renew. That's not realistic in a strong market, especially when inflation is roaring.
"The course of history shows that as the government grows, liberty decreases." Thomas Jefferson
protagonist
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Re: Tales from this insane real estate market

Post by protagonist »

AnnetteLouisan wrote: Sat Jun 11, 2022 7:28 am Relative is a NYC landlord in a pickle. Rents went way up in the highly desirable and trendy area, a tenant’s lease is expiring who has only been a tenant for one year and is not indigent or middle income. Not a regulated/stabilized/controlled apartment. Market is now $2k above what tenant is paying.

It’s kind of a hard conversation to have and landlord is a nice guy, was never in this situation before because he always charged market so always renewed at the same rent. It’s just with inflation, eviction moratoria, etc., the market is now what it is. All the other apts in his bldg get $2k more. And some in the area get $3-4k more. How to handle so as not to unduly piss off tenant? Landlords costs did not go up that much.
Hi, Annette. I will try to put myself in the tenant's position.

There are two approaches a landlord can take, that are sometimes but not always compatible....."getting what the market will allow", vs. "making a reasonable profit on an investment".

If the market allows him to raise rent $2K and he can make a killing that way, he could do so but he would not be thought of as a "nice guy". The tenant would undoubtedly be pissed off . He would be seen by tenants as "just another greedy NYC landlord" and part of a problem (that seems to be common these days, especially in places with really hot real estate markets like NYC).

If, on the other hand, the landlord's expenses went up 2K and he needs to raise the rent to cover his costs, then the landlord doesn't have much of a choice, and if the tenant doesn't understand and thinks it is exorbitant, then the tenant should probably move.

If the landlord doesn't need to raise the rent that much, but knows he can get away with it, he really is not in a "pickle". He just needs to make a choice...to be seen as greedy as others and make more money, or to only raise it as much as necessary and be seen as a "nice guy". He is only in a "pickle" if his own finances are in jeopardy- in which case he doesn't have much of a choice. He has to look himself in the mirror in the morning and be happy with what he sees, so he should do what, in the balance of things, he considers right and fair.

To reiterate, I am trying to see this in the eyes of the tenant, since that is what your "nice guy" relative is concerned about. Not to judge your relative.

The bottom line: I am SO happy I am not a landlord. I was once and hated it. And I was a really nice one, but still. When you invest in index funds you are not losing sleep at night thinking about things like this.
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Re: Tales from this insane real estate market

Post by remomnyc »

AnnetteLouisan wrote: Sat Jun 11, 2022 7:28 am Relative is a NYC landlord in a pickle. Rents went way up in the highly desirable and trendy area, a tenant’s lease is expiring who has only been a tenant for one year and is not indigent or middle income. Not a regulated/stabilized/controlled apartment. Market is now $2k above what tenant is paying.

It’s kind of a hard conversation to have and landlord is a nice guy, was never in this situation before because he always charged market so always renewed at the same rent. It’s just with inflation, eviction moratoria, etc., the market is now what it is. All the other apts in his bldg get $2k more. And some in the area get $3-4k more. How to handle so as not to unduly piss off tenant? Landlords costs did not go up that much.
Letter: "Dear Tenant, current rents have increased to $X for units your size in the building. If you'd like to renew your lease, I will offer you a one-year renewal at $X minus $300/month. Please execute and return the enclosed lease by X date to renew. If you would like to vacate, please provide 30 days notice. If you choose to move, let me know if you would like me to provide a landlord reference."
Lincoln Logs
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Re: Tales from this insane real estate market

Post by Lincoln Logs »

AnnetteLouisan wrote: Sat Jun 11, 2022 7:28 am Relative is a NYC landlord in a pickle. Rents went way up in the highly desirable and trendy area, a tenant’s lease is expiring who has only been a tenant for one year and is not indigent or middle income. Not a regulated/stabilized/controlled apartment. Market is now $2k above what tenant is paying.

It’s kind of a hard conversation to have and landlord is a nice guy, was never in this situation before because he always charged market so always renewed at the same rent. It’s just with inflation, eviction moratoria, etc., the market is now what it is. All the other apts in his bldg get $2k more. And some in the area get $3-4k more. How to handle so as not to unduly piss off tenant? Landlords costs did not go up that much.
If your relative is worried about not being a “nice guy”, he’s in the wrong business, given that NYC real estate is about as cutthroat as it gets. The market rent is by definition a fair price, and if market prices moved in the other direction, his tenant wouldn’t have hesitated to either demand a reduction or move away. (Which is exactly what happened a couple years ago).

If this is considered “greedy”, I’d suggest he increase the rent and donate the increase to the charity of his choice, not high income individuals.
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Re: Tales from this insane real estate market

Post by AnnetteLouisan »

Lincoln Logs wrote: Sat Jun 11, 2022 1:49 pm
AnnetteLouisan wrote: Sat Jun 11, 2022 7:28 am Relative is a NYC landlord in a pickle. Rents went way up in the highly desirable and trendy area, a tenant’s lease is expiring who has only been a tenant for one year and is not indigent or middle income. Not a regulated/stabilized/controlled apartment. Market is now $2k above what tenant is paying.

It’s kind of a hard conversation to have and landlord is a nice guy, was never in this situation before because he always charged market so always renewed at the same rent. It’s just with inflation, eviction moratoria, etc., the market is now what it is. All the other apts in his bldg get $2k more. And some in the area get $3-4k more. How to handle so as not to unduly piss off tenant? Landlords costs did not go up that much.
If your relative is worried about not being a “nice guy”, he’s in the wrong business, given that NYC real estate is about as cutthroat as it gets. The market rent is by definition a fair price, and if market prices moved in the other direction, his tenant wouldn’t have hesitated to either demand a reduction or move away. (Which is exactly what happened a couple years ago).

If this is considered “greedy”, I’d suggest he increase the rent and donate the increase to the charity of his choice, not high income individuals.
He doesn’t give half a fig. I’m the one who is worried because he actually is a nice guy and I don’t want him to have any trouble at his age with an angry or litigious tenant. He had one before and it was months of high stress.
Last edited by AnnetteLouisan on Sat Jun 11, 2022 1:55 pm, edited 1 time in total.
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Re: Tales from this insane real estate market

Post by AnnetteLouisan »

remomnyc wrote: Sat Jun 11, 2022 1:44 pm
AnnetteLouisan wrote: Sat Jun 11, 2022 7:28 am Relative is a NYC landlord in a pickle. Rents went way up in the highly desirable and trendy area, a tenant’s lease is expiring who has only been a tenant for one year and is not indigent or middle income. Not a regulated/stabilized/controlled apartment. Market is now $2k above what tenant is paying.

It’s kind of a hard conversation to have and landlord is a nice guy, was never in this situation before because he always charged market so always renewed at the same rent. It’s just with inflation, eviction moratoria, etc., the market is now what it is. All the other apts in his bldg get $2k more. And some in the area get $3-4k more. How to handle so as not to unduly piss off tenant? Landlords costs did not go up that much.
Letter: "Dear Tenant, current rents have increased to $X for units your size in the building. If you'd like to renew your lease, I will offer you a one-year renewal at $X minus $300/month. Please execute and return the enclosed lease by X date to renew. If you would like to vacate, please provide 30 days notice. If you choose to move, let me know if you would like me to provide a landlord reference."
I like this!
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ResearchMed
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Re: Tales from this insane real estate market

Post by ResearchMed »

AnnetteLouisan wrote: Sat Jun 11, 2022 1:53 pm
remomnyc wrote: Sat Jun 11, 2022 1:44 pm
AnnetteLouisan wrote: Sat Jun 11, 2022 7:28 am Relative is a NYC landlord in a pickle. Rents went way up in the highly desirable and trendy area, a tenant’s lease is expiring who has only been a tenant for one year and is not indigent or middle income. Not a regulated/stabilized/controlled apartment. Market is now $2k above what tenant is paying.

It’s kind of a hard conversation to have and landlord is a nice guy, was never in this situation before because he always charged market so always renewed at the same rent. It’s just with inflation, eviction moratoria, etc., the market is now what it is. All the other apts in his bldg get $2k more. And some in the area get $3-4k more. How to handle so as not to unduly piss off tenant? Landlords costs did not go up that much.
Letter: "Dear Tenant, current rents have increased to $X for units your size in the building. If you'd like to renew your lease, I will offer you a one-year renewal at $X minus $300/month. Please execute and return the enclosed lease by X date to renew. If you would like to vacate, please provide 30 days notice. If you choose to move, let me know if you would like me to provide a landlord reference."
I like this!

This isn't all that different from regular "rental renewal notices/offers", at least how we've done it over many years (and on both renter or owner sides). How has he done this in the past?

Very matter of fact. It's a rental agreement. That's all it is.
I think we'd word it very slightly differently, with "... I'd be pleased/happy to offer you a..."

I don't understand this part: he "was never in this situation before because he always charged market so always renewed at the same rent".
How long has he been doing this that he's always renewed at the same rent!? If he's never increased rents, then... well... there could be some odd expectations, I suppose.

Some "concession" to a good renter is always something to consider, given the costs (emotional and financial) of getting a new renter, including potential vacancy and fixing a place up that might not otherwise need fixing up just yet.
(A similar situation exists when one has short term rentals, such as vacation cabins. We always offered returning guests a discount. That made them happy. And we didn't have to worry as much as with someone 'new' about whether there'd be problems, etc. Win/win. It's pretty much the same thing.)

If he's been through this before and been stressed about it, as already mentioned, perhaps this isn't the right role for him, or not anymore, at least. And it sounds like he's been aggravated about this, if you are so worried.

However, did he ask for your help? If he's been doing this a long time, has he asked for help previously?
Not everyone does things the way each of us would do it, for better or for worse. And there's often not much we can do about it, unless asked for help, and asked by someone who really wants to hear that help...

RM
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Re: Tales from this insane real estate market

Post by AnnetteLouisan »

I was imprecise. Rents never jumped $2k in one year before. This is more than the usual renewing at $200-300 more. The current state of affairs is anomalous due to inflation, pandemic, eviction moratoria and trendiness of area ever increasing. I’m the one trying to soften this a bit because attitudes are inflamed right now towards landlords and that pains me since it’s not his fault.
Last edited by AnnetteLouisan on Sat Jun 11, 2022 2:30 pm, edited 1 time in total.
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ResearchMed
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Re: Tales from this insane real estate market

Post by ResearchMed »

AnnetteLouisan wrote: Sat Jun 11, 2022 2:26 pm I was imprecise. Rents never jumped $2k in one year before. This is more than the usual renewing at $200-300 more. The current state of affairs is anomalous due to inflation, pandemic, eviction moratoria and trendiness of area ever increasing.
Oh.
When you wrote that he "always renewed at the same rent", I took that to be what you meant.

But that doesn't change anything in the rest of my post.

RM
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Re: Tales from this insane real estate market

Post by AnnetteLouisan »

ResearchMed wrote: Sat Jun 11, 2022 2:29 pm
AnnetteLouisan wrote: Sat Jun 11, 2022 2:26 pm I was imprecise. Rents never jumped $2k in one year before. This is more than the usual renewing at $200-300 more. The current state of affairs is anomalous due to inflation, pandemic, eviction moratoria and trendiness of area ever increasing.
Oh.
When you wrote that he "always renewed at the same rent", I took that to be what you meant.

But that doesn't change anything in the rest of my post.

RM
Sorry RM. I liked your post. Thank you for the improved wording too. I should have written, “he always renewed within $300 of the sane rent.”

He asked for my input initially - he was going to text them - but then started quoting Thomas Sowell’s autobiography (which I bought for him but who’s counting) in which the professor objects to getting advice from his daughter with, “ how did I ever manage thus far before you arrived?” Fun times.

I may be more aware than he is of the vitriol of current anti-landlord sentiment and how more prevalent it is currently than in the recent past. Also I rented most of my life and I’d be incensed at a $2k increase.

Anyway, we shall see! I’ll give him the suggested wording. He’ll really appreciate it as do I.
Last edited by AnnetteLouisan on Sat Jun 11, 2022 2:54 pm, edited 4 times in total.
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Re: Tales from this insane real estate market

Post by corpgator »

I definitely see a top here in the Seattle area, but it plays like out this every year: crazy bid ups in the Spring then the market flattens out to find the new top until it repeats the next year.

Whether this is year is different, nobody knows, but if we compare prices to the Silicon Valley area, we've still got quite a ways to go. Salaries here match down there when you account for state taxes. Amazon, Google, Meta, and Apple all continue to grow head count up here especially on the suburban east side, so if I had to wager, I'd say we'll have a temporary top that lasts through 23 then the insanity will kick off again in 24.

As far as investors go, that's medium COL areas. You can certainly make money up here flipping, but anecdotally, everyone buying in my area I've met have been tech workers and most with young children. The older families move out as their kids graduate with a fat payday to fund their retirement.
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Re: Tales from this insane real estate market

Post by deanbrew »

AnnetteLouisan wrote: Sat Jun 11, 2022 2:26 pm I was imprecise. Rents never jumped $2k in one year before. This is more than the usual renewing at $200-300 more.
A $2,000 jump in one year is astounding. What rent level is this? How many BR, Baths and SF is it?
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Re: Tales from this insane real estate market

Post by remomnyc »

deanbrew wrote: Sat Jun 11, 2022 2:54 pm
AnnetteLouisan wrote: Sat Jun 11, 2022 2:26 pm I was imprecise. Rents never jumped $2k in one year before. This is more than the usual renewing at $200-300 more.
A $2,000 jump in one year is astounding. What rent level is this? How many BR, Baths and SF is it?
This is not insane in NYC. When people fled the City during the pandemic, rents fell dramatically, attracting people who normally could not afford to live here. Now that people have returned to the City, we're at full occupancy again and rents are returning to their normal astronomical levels.
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Re: Tales from this insane real estate market

Post by Watty »

AnnetteLouisan wrote: Sat Jun 11, 2022 7:28 am How to handle so as not to unduly piss off tenant?
Now might be a good time to turn the property over to a property management company so that they could handle it.
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Re: Tales from this insane real estate market

Post by AnnetteLouisan »

Watty wrote: Sat Jun 11, 2022 3:58 pm
AnnetteLouisan wrote: Sat Jun 11, 2022 7:28 am How to handle so as not to unduly piss off tenant?
Now might be a good time to turn the property over to a property management company so that they could handle it.
Would solve a lot of problems for us. Open to suggestions for a good one serving the metro NYC area.
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Re: Tales from this insane real estate market

Post by deanbrew »

remomnyc wrote: Sat Jun 11, 2022 3:31 pm
This is not insane in NYC. When people fled the City during the pandemic, rents fell dramatically, attracting people who normally could not afford to live here. Now that people have returned to the City, we're at full occupancy again and rents are returning to their normal astronomical levels.
OK. Didn't think of that. Quite a sticker shock for those who moved in last year.
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Re: Tales from this insane real estate market

Post by protagonist »

AnnetteLouisan wrote: Sat Jun 11, 2022 2:26 pm I was imprecise. Rents never jumped $2k in one year before. This is more than the usual renewing at $200-300 more. The current state of affairs is anomalous due to inflation, pandemic, eviction moratoria and trendiness of area ever increasing. I’m the one trying to soften this a bit because attitudes are inflamed right now towards landlords and that pains me since it’s not his fault.
How much is the tenant's current rent?
That would help us understand how "astounding" an increase it is.
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Re: Tales from this insane real estate market

Post by AnnetteLouisan »

protagonist wrote: Sat Jun 11, 2022 4:37 pm
AnnetteLouisan wrote: Sat Jun 11, 2022 2:26 pm I was imprecise. Rents never jumped $2k in one year before. This is more than the usual renewing at $200-300 more. The current state of affairs is anomalous due to inflation, pandemic, eviction moratoria and trendiness of area ever increasing. I’m the one trying to soften this a bit because attitudes are inflamed right now towards landlords and that pains me since it’s not his fault.
How much is the tenant's current rent?
That would help us understand how "astounding" an increase it is.
Under 3K. Remomnyc is on target. Name checks out! Rents were artificially low last year when the lease was signed. Plus there is less supply now because various legal changes etc made landlords think twice about renting other than at high prices and many sold to escape the new regulatory hassles / rhetoric etc. in the Hamptons too, supply is much less than usual as mom and pops recalibrate.
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Re: Tales from this insane real estate market

Post by protagonist »

AnnetteLouisan wrote: Sat Jun 11, 2022 4:45 pm
protagonist wrote: Sat Jun 11, 2022 4:37 pm
AnnetteLouisan wrote: Sat Jun 11, 2022 2:26 pm I was imprecise. Rents never jumped $2k in one year before. This is more than the usual renewing at $200-300 more. The current state of affairs is anomalous due to inflation, pandemic, eviction moratoria and trendiness of area ever increasing. I’m the one trying to soften this a bit because attitudes are inflamed right now towards landlords and that pains me since it’s not his fault.
How much is the tenant's current rent?
That would help us understand how "astounding" an increase it is.
Under 3K. Remomnyc is on target. Name checks out! Rents were artificially low last year when the lease was signed. Plus there is less supply now because various legal changes etc made landlords think twice about renting other than at high prices and many sold to escape the new regulatory hassles / rhetoric etc. in the Hamptons too, supply is much less than usual as mom and pops recalibrate.
But even if rent was depressed by COVID it couldn't have been depressed THAT much. Even if his apt. was worth $4K/month if you took COVID out of the equation, raising it to $5000 would still represent a huge rent increase even with 8%+ annual inflation (yes, I know it is prob. higher in NYC), and any new regulations. From $3K to $5K is a 67% bump!
Landlords lowered their rents a year ago because they had to, to attract business. Rents (and property values) in NYC were already through the roof before COVID. Now they are raising them ridiculous amounts because they can. The same is true in the St. Pete, FL area (where we own a condo), and I think here where I live in MA as well. I've heard so many sad stories of people forced to move because of it.
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Re: Tales from this insane real estate market

Post by 59Gibson »

THY4373 wrote: Sat Jun 11, 2022 8:53 am
59Gibson wrote: Sat Jun 11, 2022 6:58 am Sure has the feel of an irrational top. If I were looking to purchase, I'd have to wait a year or 2 and let things play out or settle down. Maybe prices would be even higher, but this is not a healthy environment right now. People twisting and bending themselves into pretzels to buy.
This is my take I realize I cannot call the market but I am very close to the point of being a buyer after renting for six years. I still place some value on the flexibility of renting but my near term retirement plans are solidifying and if now was a good time to buy I'd probably take the risk and just buy but at this point it just seems unhealthy. It also doesn't help that the places I am looking at (townhomes or small SFHs designed for retirees but not strictly 55+) literally went no place over the last two decades in nominal dollars never mind real in my local area until the last 18 months when they are up 20-35%. I can afford them but I want to see how things shake out even at the risk of paying more or buying less.
Good idea. After the economy and stock mkt blew up in 2008/09, house prices were sticky and did not hit bottom til around 2011-12, at least in my area. That's 3+ yrs after the worst of the stock mkt drop.. House prices do not turn on a dime, I think patience is wise in this environment. I do not necessarily think prices are going fall off a cliff, but there could be a softening with higher inventory levels(more choices). Prices may be stagnant for 5 yrs
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Re: Tales from this insane real estate market

Post by 59Gibson »

stoptothink wrote: Sat Jun 11, 2022 7:19 am
59Gibson wrote: Sat Jun 11, 2022 6:58 am Sure has the feel of an irrational top. If I were looking to purchase, I'd have to wait a year or 2 and let things play out or settle down. Maybe prices would be even higher, but this is not a healthy environment right now. People twisting and bending themselves into pretzels to buy.
I don't know if it is the "American dream" or what, but some people have a totally irrational emotional connection to owning a single family home. It's like "owning" that home will make my in-laws feel like they have made it, regardless of the fact that the are a complete disaster otherwise.
Yes. It's been sold hard from all major entities for a long time
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Re: Tales from this insane real estate market

Post by AnnetteLouisan »

protagonist wrote: Sat Jun 11, 2022 8:14 pm
AnnetteLouisan wrote: Sat Jun 11, 2022 4:45 pm
protagonist wrote: Sat Jun 11, 2022 4:37 pm
AnnetteLouisan wrote: Sat Jun 11, 2022 2:26 pm I was imprecise. Rents never jumped $2k in one year before. This is more than the usual renewing at $200-300 more. The current state of affairs is anomalous due to inflation, pandemic, eviction moratoria and trendiness of area ever increasing. I’m the one trying to soften this a bit because attitudes are inflamed right now towards landlords and that pains me since it’s not his fault.
How much is the tenant's current rent?
That would help us understand how "astounding" an increase it is.
Under 3K. Remomnyc is on target. Name checks out! Rents were artificially low last year when the lease was signed. Plus there is less supply now because various legal changes etc made landlords think twice about renting other than at high prices and many sold to escape the new regulatory hassles / rhetoric etc. in the Hamptons too, supply is much less than usual as mom and pops recalibrate.
But even if rent was depressed by COVID it couldn't have been depressed THAT much. Even if his apt. was worth $4K/month if you took COVID out of the equation, raising it to $5000 would still represent a huge rent increase even with 8%+ annual inflation (yes, I know it is prob. higher in NYC), and any new regulations. From $3K to $5K is a 67% bump!
Landlords lowered their rents a year ago because they had to, to attract business. Rents (and property values) in NYC were already through the roof before COVID. Now they are raising them ridiculous amounts because they can. The same is true in the St. Pete, FL area (where we own a condo), and I think here where I live in MA as well. I've heard so many sad stories of people forced to move because of it.
St, Pete Fl is such a beautiful area - how lovely that you have a condo there. I love the Don Cesar resort in St. Pete’s beach and the wonderful seafood restaurants in that area.

In the context, his apt is one of very few that are under $4k right now in that area and the building. It’s just market forces, not his fault. There’s really not much to be done. I have heard very sad stories of retirees becoming homeless. I rented myself for a long time and accepted increases, although not as much as this obviously.
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Re: Tales from this insane real estate market

Post by sandan »

corpgator wrote: Sat Jun 11, 2022 2:51 pm I definitely see a top here in the Seattle area, but it plays like out this every year: crazy bid ups in the Spring then the market flattens out to find the new top until it repeats the next year.

Whether this is year is different, nobody knows, but if we compare prices to the Silicon Valley area, we've still got quite a ways to go. Salaries here match down there when you account for state taxes. Amazon, Google, Meta, and Apple all continue to grow head count up here especially on the suburban east side, so if I had to wager, I'd say we'll have a temporary top that lasts through 23 then the insanity will kick off again in 24.

As far as investors go, that's medium COL areas. You can certainly make money up here flipping, but anecdotally, everyone buying in my area I've met have been tech workers and most with young children. The older families move out as their kids graduate with a fat payday to fund their retirement.
I appreciate the post. It must be a whirlwind up there with all the RE and fintech companies like zillow, redfin, etc. While the market may be "overheated", a new world of RE has definitely rolled out. Something similar to the shift from calling up stockbrokers to doing ETF rebalance trades on an app. MTV is dead while tiktoc is hot. Overall, I think some aspects of what traditionalists perceive to be "insane" is just an improvement in liquidity.
Last edited by sandan on Sun Jun 12, 2022 6:43 pm, edited 1 time in total.
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Re: Tales from this insane real estate market

Post by Johndoefire65 »

Low cost of living area. My cousin just bought a tiny 2 bedroom for 55k.
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